Head to Head Review: McKesson (NYSE:MCK) versus Escalon Medical (OTCMKTS:ESMC)

Escalon Medical (OTCMKTS:ESMC) and McKesson (NYSE:MCK) are both medical companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, dividends, earnings and risk.

Insider and Institutional Ownership

85.1% of McKesson shares are held by institutional investors. 1.9% of Escalon Medical shares are held by company insiders. Comparatively, 0.1% of McKesson shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Escalon Medical and McKesson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Escalon Medical	4.70%	45.60%	12.66%
McKesson	0.92%	-201.12%	5.83%

Valuation and Earnings

This table compares Escalon Medical and McKesson”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Escalon Medical	$11.98 million	0.17	-$130,000.00	$0.05	5.40
McKesson	$359.05 billion	0.25	$3.30 billion	$25.83	27.29

McKesson has higher revenue and earnings than Escalon Medical. Escalon Medical is trading at a lower price-to-earnings ratio than McKesson, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Escalon Medical and McKesson, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Escalon Medical	0	0	0	0	0.00
McKesson	0	3	10	1	2.86

McKesson has a consensus target price of $710.1667, suggesting a potential upside of 0.75%. Given McKesson’s stronger consensus rating and higher probable upside, analysts clearly believe McKesson is more favorable than Escalon Medical.

Volatility & Risk

Escalon Medical has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500. Comparatively, McKesson has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500.

Summary

McKesson beats Escalon Medical on 11 of the 15 factors compared between the two stocks.

About Escalon Medical

Escalon Medical Corp. engages in the development, manufacturing, marketing, and distribution of medical devices and pharmaceuticals in the area of ophthalmology in the United States and internationally. It offers A-Scan, which provides information about the internal structure of the eye; B-Scan, a diagnostic tool that supplies information to physicians where the media within the eye are cloudy or opaque; UBM, a high frequency/high resolution ultrasound device, which provides detailed information about the anterior segment of the eye; and Pachymeter that measures the thickness of cornea. The company also provides Ispan Intraocular Gases, such as C3F8 and SF6 that are used by vitreoretinal surgeons as a temporary tamponade in detached retina surgery; and AXIS Image management system for managing ophthalmic diagnostic images through the web browser from various devices. In addition, it markets disposable surgical packs used in vitreoretinal surgery, including packs that aid surgeons in the process of injecting and extracting silicone oil. Further, the company engages in the manufacturing and distribution of patented disposable universal gas kit, which delivers the gas from the canister to the patient. It sells its products to medical institutions through independent sales representatives, network of distributors, and internal sales employees. Escalon Medical Corp. was incorporated in 1987 and is headquartered in Wayne, Pennsylvania.

About McKesson

McKesson Corporation provides healthcare services in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, Prescription Technology Solutions (RxTS), Medical-Surgical Solutions, and International. The U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs, and other healthcare-related products. This segment also offers practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices; and consulting, outsourcing, technological, and other services, as well as sells financial, operational, and clinical solutions to pharmacies. The RxTS segment serves biopharma and life sciences partners, and patients to address medication challenges for patients by working across healthcare; connects patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies to deliver innovative solutions to help people get the medicine needed to live healthier lives; and provides prescription price transparency, benefit insight, dispensing support, third-party logistics, and wholesale distribution support services. The Medical-Surgical Solutions segment offers medical-surgical supply distribution, logistics, and other services to healthcare providers, including physician offices, surgery centers, nursing homes, hospital reference labs, and home health care agencies. The International segment provides distribution and services to wholesale, institutional, and retail customers in Europe and Canada. McKesson Corporation was founded in 1833 and is headquartered in Irving, Texas.